Categories: Base Metals / Precious Metals
Topics: General Base Metals / General Precious Metals

Thom Calandra of The Calandra Report on Why He Likes Gold, Copper, & Royalty Companies

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is one of the most active investors and speakers on the circuit, Mr. Thom Calandra. Tom, how are you?

Thom Calandra: Very good. Muy bien, Gerardo. It's always a pleasure to talk to you. I'm just so glad to hear that you're enjoying Texas. The Lone Star State now has another star in it, and that would be you.

Gerardo Del Real: I appreciate that kind words. Thank you. We're absolutely loving Austin. I could have described your background for about half an hour. You're the founder of Thom Calandra StockWatch, The Calandra Report, thomcalandra.com, Ticker Trax. I could go on and on.

Can you provide a little bit of background for those that are not familiar with you, Thom, about what you've done in the past?

Thom Calandra: The big score, Gerardo, was the MarketWatch. We started MarketWatch.com in 1995-96 when internet was going. I had been working in London at Bloomberg, lifelong journalist. At that point, I had been working for wire services, newspapers, magazines, and so on, mostly in financial.

My former editor at the San Francisco newspaper said, "You know, you're doing this stuff in London, there's this thing called the internet and the worldwide web and we have free data. We're going to give away the free data, 15 minutes delayed." It was the first company to do this, Data Broadcasting Corporation. "Why don't we build a news product around it?"

We did. Our timing was impeccable. Then, we sold a third of the equity to CBS, another third of the equity to the Financial Times. I went to London again for another two years with my family to build FT MarketWatch, and the whole MarketWatch juggernaut became big.

We sold it to Dow Jones, The Wall Street Journal, in 2004 for $518 million cash. I'm not associated with it anymore. I was the editorial person, so I was one of the three or four people that started the company. My former editor was the CEO. It's still the largest financial news service, Gerardo, on the internet for free. The largest, and it's something like, I'm told, the 40th or the 42nd largest website and service of any type. It's like, wow! That beats dating sites and pornography. We created a monster.

Gerardo Del Real: Tough to beat. That's tough company to compete with, Thom. You're doing a heck of a job, obviously.

Thom Calandra: That was lucky. That was lucky and, Gerardo, that sparked my reach. Like, why should people listen to what Thom has to say about the markets or about this investment or that investment he’s reporting? The fact is, we had tremendous reach. At one point, we had a television show for five years on CBS. I was on the news. Dan Rather and other announcers would say, "Now, for the CBS MarketWatch, here's Thom Calandra in San Francisco."

Then, we built newsrooms around the world. Just got lucky, lucky enough to have a lot of hardworking, smart journalists and executives and salespeople. It was a good advertising model as well. That kind of stuff.

Gerardo Del Real: That's fascinating. That's fascinating. So you have nearly four decades of experience, right? Let's talk 2019. Let me pick your brain a little bit, Thom. What is attractive to you out there? What are you looking at right now where you see compelling risk-reward propositions?

Thom Calandra: Well, Gerardo, I would say first of all, almost probably 38 years as a writer, a journalist, and definitely more than that as an investor. I've made every mistake in the book, just like a lot of us have.

Gerardo Del Real: Guilty as charged.

Thom Calandra: Yeah, guilty as charged. Some of those mistakes have been innocent mistakes. I crossed the line once with the SEC and paid for that and wrapped that up very happily and niftily, thank you. It was probably the best thing that ever happened to me in my life, that whole situation, because it sets a perspective.

But when it comes to investing, it's so easy to make these kind of mistakes. I was out to dinner last night at a pizza place here in Marin County, California, where we live. My friend, Dan, who's also a subscriber to The Calandra Report, said, "How do you filter all this stuff?" I said, "It's tough, especially when markets heat up."

Here we are now in 2019, if this had been mid-December 2018, everybody was fleeing small caps, micro caps and especially, Gerardo, the resource stocks. The metals, mostly. Fleeing them. I just had the CEO of Alamos Gold saying, "Wow!"

Compare AGI, the ticker of Alamos, which is a producer in Mexico and in Canada, compare what was going on in mid-December to what's going on right now. That happened to everything. Of course, in mid-December, you had all the ... I don't want to call them wise guys, but all the so-called analysts, as they do every single year, saying, "Oh, this is end of year tax selling and we'll bounce back, sometime by mid, late January. It's cyclical."

You know what? Half the time they're right, and half the time they are so wrong, it's embarrassing. This time, they're right. The metals are really heating up. The equities, since I'd say late December, the equities have outperformed the actual metals at least two-and-a-half times, as you would expect. Right?

Gerardo Del Real: Absolutely. That's why we're in this.

Thom Calandra: Yeah, exactly. Some of them, like the silver stocks. Take Endeavour Silver, for example. Ivanhoe Mines. There's a lot of them. Done well, well, well better than the metals that they mine or explore for, or have projects that they're developing.

The reasons why. Once again, my friend, Dan said, "But why? Why are commodities hot right now?"

I said, "Dan, one mistake that I always used to make was trying to figure out all the reasons why."

He says, "But wait, Thom, the dollar. Sometimes the dollar's strong and gold goes up, and sometimes it's down. Don't blue chips go down when gold goes up?"

I said, "Dan," this is an ordinary engineer here in the Bay Area, nice guy, PE. He'll be my objective correlative.

Gerardo Del Real: Absolutely.

Thom Calandra: He's an engineer from PG&E. He's got money, like we all do. Right? I said, "Dan, don't try to get into the why's all the time. Try to have a secular view, your own personal secular view, of what you see and how you see it transpiring and then try to stick to that.”

Because if you're going to try to get into all this stuff. “There's co-relation here. There's no co-relation here. Did you see the Fibonacci the other day?” Fibonacci? I mean, I'm still working on some of the Italian directors. I haven't seen any of their films and they're talking to me about Fibonacci and charts. It's like, "Okay, stop. Come up with a secular view. That's all. And stick to it."

Gerardo Del Real: Excellent. Let's talk sector specific commentary. Are there certain sectors within the resource space that you're more bullish on? Do you prefer the gold and copper, as I do? Are you more into the leverage silver plays? What's your approach there, Thom?

Thom Calandra: Interesting. I've been spending a lot of time, like the last 12 years, but definitely the past 12 days and 12 weeks, on the royalty companies.

Gerardo Del Real: Interesting.

Thom Calandra: Yeah. What happens is the royalty companies don't kick in unless there is a true flow of money into the sector. I'm talking any kind of royalties. I mean, you could have agricultural royalties. You could have streams. But mostly, I'm talking about the metals. Net smelter returns. Right now, those have been tremendous. The royalty companies probably are outpacing most of their peers.

Gerardo Del Real: Absolutely. So, you like the royalty companies. Are there any specific names? And I know that you have a subscription service, so I don't want you to give them away, but is there any one that you could share with us?

Thom Calandra: Absolutely. My model at The Calandra Report, we have about 750 subscribers. They pay. Once you lock in, they pay the same. They keep that price. So, going back. This is a resurrected The Calandra Report from the old days when I had like millions of people, literally. Nelson audited millions of people coming in and looking at our stuff and also listening TV, radio, the internet.

But, I would say, the things that I follow, I tend to own. I let folks know, "Hey, I'm going to buy this." Not always, but most of the time. Most of the companies that I own, that I'm passionate about, I've owned for a long time.

I mean, Ivanhoe Mines, the one in Africa, I've owned it since 2003, when it was a private company and I was there with Robert, the CEO, at the Platreef, the platinum project that Mr. Freeland has there.

Gerardo Del Real: That's been a fun ride for you, I imagine.

Thom Calandra: Yeah. Obviously, it's really bouncing back now because of the copper in the Congo, at Kipushi and Kamoa-Kakula.

But, let's go back to royalties for a second. I mean, there are four royalty companies whose shares I own. It's fairly well-known. EMX, which is based on Colorado. They're in jurisdictions around the world. They used to be called Eurasian and they have a team there, Dave Cole, Dave Johnson, Michael Winn, Scott Close, et cetera. They’re everything. They're an accelerated project generator. They're a collector of royalties. They're a developer of royalties. They get shares. They just got shares from a company yesterday. Now, they own 9.9% of a company that's going to be developing one of EMX's battery metals projects in Scandinavia. So EMX is one.

The one that's near and dear to my heart is Golden Valley Mines/Abitibi Royalties. I've been following Glenn Mullan there in Quebec since 2011, when I first went to the Canadian Malartic to see this thing called Golden Valley Mines/Abitibi Royalties, two companies. It's taken seven years for that company to see its partners, in this case Agnico Eagle and Yamana, develop the properties upon which they own royalties. It takes such a long time, but now that we're seeing this money into commodities, into metals, people are starting to say, "Oh, gee! Some of these lesser known royalty companies."

I'm not somebody, Gerardo, who invests in the big ones. The biggest company I own in the resource sector – not in biomedical, but in the resource sector – is Ivanhoe Mines. I want to guess it's $2 billion. But most of the stuff I own is $100 million or less.

Gerardo Del Real: Absolutely.

Thom Calandra: And you're familiar with that model.

Gerardo Del Real: Absolutely.

Thom Calandra: So, I'm not going to invest in a Franco-Nevada, which is one of the larger, more successful royalty companies. I want to invest in companies that I can get to know the people or I already know them, that I can get to see the properties. You know I love to go and see the properties. I want to know who some of the large shareholders are.

I want to see if I'm missing something, and then I tap people who, let's say, are much more mathematically inclined, like our kids, than I am, and much more willing to look at everything, whether it's the financials on a prefeasibility or an economic assessment or are they returning capital to shareholders. Is this project for real? If it's a project, are the Capex estimates for real or is this hocus pocus? That's a long answer to your question.

Then, surely, you mentioned copper, gold. The metals that I'm excited about, I've always been a gold bug. I mean, I died my hair gold in 2002, 2001 maybe. Anyway, when we were living in London the second time because I said, "Okay, gold's going to go over 400 bucks."

Gerardo Del Real: Good timing.

Thom Calandra: And when it does, I'm going to dye my hair gold.

Gerardo Del Real: Good timing.

Thom Calandra: Sure enough, I went down to High Street and died my hair gold. So I love gold. I don't dislike silver. I have some people, some companies like Endeavour Silver, that are important to me, mostly because I follow mostly their executives. In the case of Endeavour, it's Brad Cook, because of some of the other companies that he's created, like Aztec Minerals, in Mexico/Arizona. That kind of thing.

I don't know why. We own plenty of silver here at home and we have hundreds of pounds of silver, what they call 92% junk silver, coins, silverware, silver certificates. Sure, silver is interesting. But for me, when I look at a metal as a currency, it's gold. When I look at the financial metrics of a metal and whether it could truly become or re-emerge as it was centuries ago, and even decades ago, as a currency, that's gold for me.

But, I also love copper. As a very smart guy, whose name I just mentioned from Ivanhoe, once told me. He said, "Always be long whatever China is short of." China has been short copper for a long time.

I know we have many, many challenges on this planet. I'm probably reading too many books that discuss those challenges that we have on this planet when it comes to over-population and over-mining of resources. Every improvement we make, moves us a step closer to destroying the planet and that includes a lot of things. Machine learning, for example, AI. But, as long as we're alive, you and I, and we realize what it takes to be a manufacturing world. This is still the great industrial revolution. It never ended. Copper is the chief building material, the building block of the world, probably more so even than fuel.

Gerardo Del Real: That's well said, Thom. So, be long whatever China is short. I love that. You are often at conferences. You were kind enough to have me on your precious metals panel a year or two ago in New Orleans. You travel. You do site visits. I mentioned you've been doing this for a little over four decades, I was corrected.

How can people benefit from those insights, Thom? How can people get in touch with you if they want to subscribe and they want to follow you around on the site visits with your investment endeavors?

Thom Calandra: I love that. Right now, of course, The Calandra Report. We charge $229 a year for it. If you have a sob story, please let me know. Whatever you come in at. I have folks who are still paying $39 a year for it, because they have recurring membership and I just let them stay at that.

I like to handle our subscribers in a very personal way. I don't know all of them, but I probably know half of them. Some of them have been with me since 1998, with the former Calandra Report and Thom Calandra's StockWatch and MarketWatch and Ticker Trax and all that other stuff.

I'd say, go to thomcalandra.com. There are some pieces that you can access there for free, but not many. Well, there are probably dozens and dozens of them going back over the past eight or nine years, but we don't give it away.

This is interesting maybe for you, Gerardo. I stopped distributing any of the material to anyone except subscribers. It's always under lock and key. Then, once in a while, I'll put something out. I got a lot of interest in a biomedical company in Halifax that I follow and that we own a lot of. After a while, so many people are saying, "Well, what do you think about this? What do you think about that?" I say, "Well, it'd be nice if you subscribe, but okay, here, I'm going to post this one two days afterwards and discuss this immunotherapy company. So, there you go. If you like the product, maybe you'll think about subscribing."

Right now our investors are doing well. It hasn't always been like that. As you know, many of us got faked out six or seven years ago when we thought the gold price was going to come back and the metals prices were going to come back. But now, it does look – I don't know, I'd love to hear what you think, Gerardo – but it does look like there is new money coming into metals. Not just gold, but copper, platinum, palladium, tin, rhodium, tungsten, et cetera, et cetera.

Gerardo Del Real: I agree with you. I absolutely agree with you. I mean, even if we looked here just recently in dollar terms, January saw, I believe, something like $3.1 billion dollars in net inflows into gold. Central banks in 2018 were buying like they haven't bought any in a long time. I think Central Bank demand increased 74% or something like that in 2018. We're talking about gold here.

I think when you look geopolitically at everything that's happening, not just here, but overseas, and you look at Central Banks and their influence on markets and the fact that it's very apparent now with Fed chairman's Powell's recent pivot that he's paying attention to the stock market and the Fed put is there, I think we have all of the stars lining up for what I think is going to be a historic commodity bull market here in the next several years.

I eat my own cooking. I'm putting my money where my mouth is. I've written more checks for private placements than I probably should have in 2018, but I think this year and next, I'll look back and give myself two thumbs up for having written those checks and having some faith and hopefully calling a bottom.

I'm one of those people that the head fake in 2016 with gold, I fell for that head fake. So we pay for past sins by seeing shares that we bought at $0.50 go down to $0.10. But if you have the wherewithal to know the management, to know the assets, to know the business plan, then those $0.10 shares can go to $2 and $3. We've seen it in the past. It's a cyclical sector. It's why I do it. Other than playing baseball for the Chicago Cubs, there's nothing I'd rather do.

Thom Calandra: Spoken like a good Catholic, Gerardo. I'm just guessing, but ...

Gerardo Del Real: Once upon a time.

Thom Calandra: Yes. I'm in that club. But, we've done our penance. It is fun, by the way, as you know. It's a lot more fun to be making money than to be losing it.

Gerardo Del Real: Absolutely. Absolutely, Thom.

Thom Calandra: You get a charge on stuff like this. As you know, by the way, it's a tough sector because there's a lot of morons in it and a lot of fraudsters and a lot of unlucky people, a lot of unprepared people, because it doesn't take a tremendous amount of capital to get into the mining business or the metals business.

Gerardo Del Real: It does not.

Thom Calandra: But, it's so fragmented. There’s tens of thousands of these companies, large and small. Somebody once told me, Gerardo, that if you look at the iron ore, all the seaborne iron ore in the world, you could maybe name five producers of iron ore that are responsible for two-thirds of all of the seaborne iron ore in the world.

Well, do that with gold. You can't. You'd go into the hundreds of companies that are out there, shipping gold, actually producing it and shipping it. That's crazy.

Gerardo Del Real: Takes care of our due diligence for us, Thom. Helps out, right?

Thom Calandra: Yeah. There's too many companies. Too many, so that's one of the dangers.

Gerardo Del Real: Absolutely. Well, Thom, I want to thank you for taking the time to come on. I hope you join me here in the next month or two. I get the feeling 2019 is going to be very, very interesting. You have such a varied background and so many insights, Thom, that I think it'd be fascinating to have you on every couple of months just to get your take on where things are.

Thom Calandra: It's been a tremendous pleasure, Gerardo. It's great to hear from you and I hope we can say todo bien in a few months. All is well. Hopefully cross your fingers and pray if you're Catholic, or just meditate, if you're not, and hopefully we'll hit it out of the park.

Gerardo Del Real: There you go. Fingers are crossed. Thom Calandra, thomcalandra.com. Thank you, sir.

Thom Calandra: Thank you, Gerardo.